Self-Described New York Money Manager Pleads Guilty In $5 Million Fraud Scheme
Schemers Used Phony HSBC Documents And Purported Attorney Escrow Account To Dupe Lone Victim
Thomas Bannon, the president of Overseas Investors LLC and Overseas Investors International, Ltd. (collectively, “Overseas Investors”), pleaded guilty today in federal court in Brooklyn, New York, to one count of wire fraud for defrauding an individual entrepreneur of $5 million through, among other things, false representations about his access to hedge funds and wealthy investors. When sentenced on October 3, 2014, Bannon faces up to 20 years in prison and the payment of $5,001,949 in restitution to the defrauded entrepreneur. Co-defendant Theodore Sweeten pleaded guilty on June 19, 2013, to one count of wire fraud and was sentenced to 48 months in prison on January 7, 2014.1
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office.
“Thomas Bannon claimed to be a money manager who had access to millions of dollars. In reality, Bannon was a con man and the only access he had was to the phony bank documents that he used to perpetrate this bold fraud,” stated United States Attorney Lynch. “This Office is unrelenting in its commitment to bring to justice those who seek to defraud unsuspecting investors through lies and deceit.” Ms. Lynch expressed her appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.
Bannon falsely represented to the victim entrepreneur that Overseas Investors collaborated with hedge funds and wealthy investors who were willing, in exchange for a substantial fee, to “lease” funds and set up bank accounts in its clients’ names that contained the leased funds. Based on this and other misrepresentations, Bannon and his co-conspirators induced the victim to invest $5 million in order to “lease” a credit line of $100 million, which in turn would enable them to generate millions of dollars in profit through special investment programs. In furtherance of that scheme, Bannon and his co-conspirators falsely represented that the victim’s funds would be held in an attorney escrow account pending confirmation of the posting of $100 million in the leased-funds account. In fact, Bannon and his co-conspirators simply distributed the victim’s $5 million among themselves and falsely represented that a $100 million account had been created at HSBC by sending the victim fabricated bank documents on HSBC letterhead.
When the victim discovered that the bank documents on HSBC letterhead were phony, he requested a refund of the $5 million that he had deposited into the attorney escrow account. In response, Bannon and his co-conspirators told the victim that the money had been disbursed to the investors who created the $100 million account. In particular, Bannon concealed from the victim the fact that he had requested and received $600,000 of the escrowed funds prior to the issuance of the fabricated HSBC documents.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes and Marcia M. Henry.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Residence: New York, New York
E.D.N.Y. Docket No. 12-CR-471
1 The case against co-defendant Robert Bardey is pending and scheduled for trial. The charges against Bardey are merely allegations, and he is presumed innocent unless and until proven guilty.